Eagle Ford conference attendees prepping for long, low oil prices

Question from ’14 answered — and it’s not good news

This time last year, the energy industry in South Texas braced for a drop in the price of a barrel of oil.

How bad could it be? How long would it last?

Bad and long, as it turns out.

As Hart Energy’s DUG Eagle Ford Conference opens at the Convention Center today, Leslie Haines, conference moderator and editor of Oil and Gas Investor, expects a mood much different from years past, when the field grew so fast it blew past production predictions again and again.

Express Newsletters

Get the latest news, sports and food features sent directly to your inbox.

“This year it will be a little more realistic, if not somber,” Haines said.

Companies are heavily focused on technical improvements, needing to work as efficiently as possible. Haines said operators are preparing for an extended period of lower prices.

“I think this lower-for-longer phase is going to be true for this year and into next year,” Haines said. “Everyone is really circling the wagons now.”

Haines said much of the focus has been on idled drilling rigs, which are down by 1,100 across the U.S. in the last year, and on estimating the number of layoffs in the industry. By August, the U.S. had seen at least 91,000 job cuts across the energy industry since prices collapsed the year before, according to Continental Resources, an Oklahoma oil company that tracks layoffs.

Haines said not enough is said about abandoned man camps and RV parks, or the amount of other equipment sidelined by the price crash.

A recent report from research and consulting firm Douglas-Westwood, which it called “Frac Truck Boneyards,” said 4,000 frac trucks are sitting idle across the country. Jacob Halevy with the firm wrote that “a glut of oilfield equipment is likely to continue in the US for some time.”

A recent analysis from Austin-based Drillinginfo showed operators were pulling back overall on activity in the Eagle Ford Shale in South Texas. But companies increasingly are focused on Karnes County, long considered the best part of the field.

“Down the road, we could see a situation where Karnes” production keeps climbing when other counties’ production keeps decreasing,” said John McCormack, an oil and gas analyst at Drillinginfo.

At the DUG Conference, which runs through Tuesday, speakers include Gregory Leveille, unconventional reservoirs technology program general manager for ConocoPhillips; Vance Hazzard, vice president operations for Pioneer Natural Resources’ South Texas Asset Team; and Kirk Spilman, regional vice president for Marathon Oil.

Hart Energy’s Midstream Texas Conference will be held at the same time and place as the Eagle Ford conference. Topics include the ongoing infrastructure buildout in the state, the export market and the growth of the Gulf Coast petrochemical complex.